Bitcoin and the S&P 500 under Trump
The S&P 500 index just suffered its worst week since COVID-19 wrecked stock markets back in March by falling 6%.
But Bitcoin didn’t — the world’s most popular cryptocurrency actually rose 6% last week despite the sweeping European lockdowns, widespread joblessness, and looming US election.
Delphi Digital analyzed historic S&P drops against Bitcoin performance over the past four years. The takeaways:
- The correlation between S&P price drops and Bitcoin price is remarkably low.
- Bitcoin does another interesting thing every time the S&P rises.
- The rest of the cryptocurrency market mostly follows Bitcoin.
Just give me the bull case
Here’s the hopium: Bulls say Bitcoin is an uncorrelated, safe-haven asset, meaning its price isn’t at all tied to the fluctuations of regular stocks. So, it shouldn’t matter what the S&P does, buy Bitcoin.
In fact, Bitcoin often rallies during civil unrest, kinda like how gold increases during X. So, instead of burying gold in your backyard, turn your cash into Bitcoin, stick it on a Ledger, and bury that instead.
They have a point: the data shows Bitcoin’s correlation with the S&P 500 is this and that, I haven’t researched this and the second half of this sentence is now just filler.
Equal rights for bears
Orange coin don’t always go up. What does Delphi Digital say about Bitcoin’s biggest price drops in the past 4 years?
- Perhaps the number of days Bitcoin has gone down in the past 4 years compared to the S&P (when it goes down, it goes down big?)
It’s important to remember we’re in new territory with Bitcoin. It’s difficult to read too much into its historic price performance because, well, it’s risen by 345,398% in X years.
So, as for whether Bitcoin does better under Republicans or Democrats? Well, BTC went up X% under Obama, and is now X% under Trump.
Remember: it might feel nice to believe that a volatile stock market always leads to a higher price for BTC, but past performance doesn’t indicate future results, be it Bitcoin, Chainlink, or even Ethereum.